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particularly serious, but this is only one of numerous similar occa- 

 ^ slone that v/ill be forthcoming. In spite of all tallt of price control, 

 we' shall have a continuation of some form of inflation so long as the 

 government is obliged to finance the armai^ent and lease- lend programs 

 by borrov;ing from banks. It is not likely that banks will contract 

 the volume of commercial loar.s outstanding if they increase their loans 

 to the federal government. In fact, commercial- bank loans have been 

 increasing -rather rapidly during the past few months. 



The Secretary of the- Treasury also indicated that our defense 

 expenditures are inadequate. He said that the United States is trying 

 to be the arsenal of democracy by devoting only 20 per cent of factory 

 and mining output to defense, only JO per cent of the output of durable 

 goods, only 10 per cent of nondurable goods and only l6^ per cent of 

 national income. He announced that 1,3 billion dollars was spend for 

 defense in September, the largest monthly figure so far. We have just 

 this week begun to adjust ourselves to the new excise taxes on various 

 types of commodities and have doubtless made efforts to estimate approx- 

 imately how much income tax we shall have to pay next March. The bill 

 will be rather heavy. But in this connection the Secretary of the 

 Treasury said that the revenue act of 19^1 which calls for these taxes 

 which we are now facing was a "good start," but that the tax bill next 

 year will have to be a genuinely "all-out" bill to raise the necessary 

 revenue, check inflation and take the profit out of war. 



The definite steps that have been taken to increase taxation, 

 place ceilings upon prices and reduce slightly the lending power of 

 banks, together with the further proposals for legislation of an anti- 

 inflationary nature, have helped check the rise in prices that was 

 taking place prior to August. Actual accomplishments to date have not 

 been adequate, however, to prevent a resumption of the upward trend 



